When someone says they don't know what you see in them

He's insecure...probably more so because you're not official. Whether making you both official or not will change his insecurities is up to him. You need to talk to him and tell him that you can't consider being in a relationship with him when he acts like this and that you get upset when he puts himself down. Also the fact that you're seeing him shows enough you like him... those actions speak for himself.
To be fair, he doesn't sound emotionally mature to handle a relationship

hi everyone, thanks for the reply.

The official thing hopefully will come to a surface soon. Do you think emotional maturity comes with time and that giving reassurance would help things? Why is it a bad thing to be with an insecure person?

It's not bad to be with an insecure person - it's just that you have all this **** to deal with. They need to love themselves and appreciate themselves, if they don't love themselves and see flaws, then they need to be doing things to work on those flaws to improve as a person.

Dump him before he dumps you

He's insecure. People with insecurities sometimes don't bother making an effort because they've given up; they have a complete lack of confidence and don't really care what anyone thinks, it's a sort of 'take me as I am'. He's basically saying that you deserve better and you're much prettier which on your side is a compliment.

However, many relationships involving really insecure people don't often progress that well.

Thats true. I have given him a bit of reassurance and he seems happier. Do you think he sounds serious about me?

I'm not sure ....it's difficult to tell.

I think he wants to sound serious, however when people have a low self esteem and are insecure, they hinder themselves with different aspects of their life - work, relationships etc. So if he wants to be serious about you, there will always be that nagging thing in his mind saying "I'm not good enough for her, she is going to leave me anyway" etc etc.

You need to speak with him and make it VERY VERY CLEAR that you are in this relationship because you love and care for him, and that any doubts he has is down to him to change, not you. It's his reasoning and his mentality which makes him think he is not good enough, not you and not circumstances. Tell him that if he can't accept the fact that you're both in a relationship, then he shouldn't have agreed to it initially - only to back down. That you think you and him are both equal in the relationship and you wouldn't be or waste time with someone, or even bother having this conversation if you didn't think that there was something to fight for. If he has insecurity issues, tell him you will help him get through them and you're there for him, but this is solely as a result of him and not you.

Make sure he knows this is your stance on the matter and that you will not repeat it and not have the conversation again.

It's a little harsh - but you need to be very very clear when speaking with him, otherwise a conversation like this can drag on and you will still have this problem next year and next year.

Relationships are hard enough without someone actually in the relationship jeopardizing it.

It sounds 100% like insecurity, he thinks he doesn't deserve you and that since you haven't introduced him to friends you're embarrased of him.